Jyoti CNC Automation Limited — Q2 FY25 earnings call

Call held 18 Nov 2024

Management summary

Jyoti CNC delivered a robust Q2 FY25 performance characterized by high double-digit revenue growth and substantial margin expansion. The company is successfully pivoting toward high-value segments like Aerospace and EMS, which is reflected in the record order book and improving realizations. Management is aggressively expanding capacity both in India and at its French subsidiary, Huron, to meet surging demand.

Highlights

  • Revenue from operations grew 43% YoY to ₹430.7 crores in Q2 FY25.

  • EBITDA margin expanded significantly to 25% from 18% in the previous year.

  • Operational PAT surged 352% YoY to ₹75.9 crores for the quarter.

  • Order book reached a record ₹4,289 crores, with Aerospace contributing 43%.

  • Quarterly order intake stood at ₹1,283 crores, driven by a massive surge in EMS orders (41% of intake).

  • Average machine price realization improved to ₹41.37 lakhs in Q2.

  • H1 FY25 revenue reached ₹793 crores, a 55% YoY growth with a 25% EBITDA margin.

  • Announced a ₹400 crore CAPEX to add 10,000 machine capacity at Rajkot by December 2025.

Key financials

  1. Revenue ₹430.7 Cr +43%YoY
  2. EBITDA Margin 25%
  3. Operational PAT ₹75.9 Cr +352%YoY
  4. Order Intake ₹1,283 Cr
  5. Order Book ₹4,289 Cr
  6. Average Realization ₹41.37 lakh

What they filed

Q1 FY27: revenue up 36.8%, net profit up 20.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue376 400 529 372 448 +19%530 +33%599 +13%509 +37%
EBITDA95 112 176 99 111 +17%164 +46%191 +9%139 +40%
Net profit70 77 122 72 79 +13%105 +36%135 +11%87 +21%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentRevenue ContributionOrder Book Share
Aerospace38%43%
Auto & Auto Components29%15%
EMS (Electronics Manufacturing Services)11%17%
General Engineering16%16%

Guidance & targets

Volume

  • Annual Order Inflow Volume · FY25 · High confidence ₹2,500 - ₹3,000 crores
    No, I don't want to revise that I want to stay there what I anticipated, and we are going to be delivering that basically.

    — Parakramsinh Jadeja, Managing Director

  • Aerospace & Defense Order Intake Volume · FY25 · High confidence ₹1,000 - ₹1,500 crores
    Absolutely. [In response to being on track for ₹1000-1500cr aerospace orders]

    — Parakramsinh Jadeja, Managing Director

Capacity

  • Rajkot Capacity Expansion Capacity · by December 2025 · High confidence 10,000 machines
    Additional 10,000 machine capabilities we are doing over here... expecting to finish in this two financial year, this year and to next year.

    — Parakramsinh Jadeja, Managing Director

Revenue

  • Huron Peak Revenue Potential Revenue · Post-expansion · Medium confidence €80 million
    After this expansion, in Huron we can see up to €80 million to be there.

    — Parakramsinh Jadeja, Managing Director

Margin

  • EBITDA Margin Profile Margin · Forward · Medium confidence 25%
    So with this mix, whatever the margin we are maintaining today, I think we will maintain the same profile on coming days over here.

    — Parakramsinh Jadeja, Managing Director

Risks & concerns

  • Auto Sector Slowdown

    medium

    Analysts raised concerns about the domestic auto slowdown; management countered by highlighting the shift to EV/Hybrid components.

    Analyst acknowledged

  • Unbilled Revenue Buildup

    medium

    ₹90-100 crore increase in unbilled revenue related to EMS projects; management expects this to reduce drastically by Q4 as dispatches occur.

    Analyst acknowledged

  • Execution Delays at Huron

    low

    Equipment installation delays pushed the Huron facility completion from September to December/January.

    Both acknowledged

Areas of evasion (2)

  • Specific full-year revenue and PAT forecast numbers.
  • Refusal to raise order inflow guidance despite strong H1 performance.

Q&A highlights

1 direct, 1 evasive
EMS Order Size and Execution Direct
In terms of a, it's close to Rs. 700 crores now... This we have to deliver in one year.

Confirms a massive near-term revenue driver in the EMS segment with a clear 12-month execution timeline.

Asked by Ankur, HDFC Life Insurance

Conservative Order Inflow Guidance Evasive
No, I don't want to revise that I want to stay there what I anticipated... What guideline we have given we will maintain those things.

Management is being highly conservative by not raising the ₹2,500-3,000cr annual target despite achieving ₹1,600cr in H1, suggesting potential for a significant beat.

Asked by Nidhi Shah, ICICI Securities

Huron Capacity Expansion Delays Partial
We were initially looking to be December and still we are crossing our fingers but there is some delays are going on there... ready somewhere in end of December or middle of January.

Highlights minor execution delays in the French subsidiary's expansion, which is critical for high-end aerospace orders.

Asked by Sanidhya, Unicorn Asset Management

2 min read 5 chapters

Detailed narrative

Explosive Growth and Margin Expansion

Jyoti CNC reported a stellar 43% YoY revenue growth in Q2 FY25, reaching ₹430.7 crores. This growth was accompanied by a significant expansion in EBITDA margins, which jumped from 18% to 25%. The margin improvement is primarily driven by a superior product mix, with high-margin aerospace and high-end machines contributing a larger share of the revenue. Operational PAT saw a massive 352% increase, reflecting the high operating leverage inherent in the business as it scales.

Strategic Pivot to Aerospace and EMS

The company is successfully transitioning from being an auto-centric machine tool player to a high-technology supplier for Aerospace and EMS. Aerospace now accounts for 43% of the total ₹4,289 crore order book. The EMS segment has emerged as a major growth engine, contributing 41% of the Q2 order intake. Management highlighted a specific ₹700 crore EMS order that is slated for execution within the next 12 months, providing strong revenue visibility.

Massive Capacity Expansion Roadmap

To support its burgeoning order book, Jyoti CNC has embarked on a ₹400 crore CAPEX plan at its Rajkot facility. This expansion aims to add 10,000 machines to its current 6,000-machine capacity by December 2025. The new facility will be highly automated and focused on entry-level and EMS products. Management expects this additional capacity to be critical for fulfilling the large pipeline of orders expected in FY26 and beyond.

Huron Graffenstaden Turnaround

The French subsidiary, Huron, is central to the company's aerospace strategy. Despite minor delays in debottlenecking (now expected to be complete by Jan 2025), Huron's revenue potential is projected to reach €80 million post-expansion. In Q2, Huron contributed approximately ₹70 crores to the consolidated revenue with over 80% capacity utilization. Huron's technology backbone allows Jyoti to compete in the sophisticated 5-axis machine market globally.

Global Footprint and US Market Entry

Jyoti CNC is aggressively expanding its international presence, with exports already accounting for 45% of H1 FY25 revenue. The company announced plans to establish a technical center and warehouse in the US within the next year to support large aerospace clients. This move is aimed at meeting the US market's demand for fast delivery and local support, positioning Jyoti to capture a larger share of the world's largest aerospace consumer market.

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